How to categorize the first three trading days this week? Monday saw sharp intra-day FX swings on speculation over incoming US tariffs. Tuesday saw Trump's wide-ranging press conference espousing expansionist US foreign policy (including more tariff threats). And Wednesday saw this week's Treasury market sell-off (helped by a couple of poor auctions) lead to broader financial market volatility – enough to shake out long sterling positions, ING FX analyst Chris Turner notes.
Next big move only coming on tomorrow's payrolls
“The good news for those seeking a little calm is that last night's 30-year US Treasury auction came in a little better than expected and that the US bond market should be quiet today on a US Federal holiday and an early bond market close – that Federal holiday to mark the funeral of former president Jimmy Carter. However, we doubt the dollar needs to hand back much of its recent gains. Last night's release of the December FOMC minutes confirmed the Fed's stance that it is ready to slow the pace of its easing cycle amid solid growth and upside risks to its inflation forecasts.”
“We have five Fed speakers later today, but the next big impact on expectations of the Fed easing cycle will be tomorrow's December NFP report, where some see upside risks. Equally, the USD is likely to stay strong into Trump's inauguration on 20 January. If Tuesday's press conference is anything to go by, Trump will come out swinging at the start of his second term – as we discussed in our 'Trump clean sweep' scenario in August last year.”
“Elsewhere of note today is the firm wage data in Japan which we think makes the risk of a Bank of Japan rate hike on 24 January more likely. This – plus the threat of renewed FX intervention – will help firm up the view that USD/JPY will struggle to break through the 158/160 area. Despite the risk of profit-taking, DXY found good support under 108 earlier this week. Expect tight ranges and the c, unless Trump has something to say on Truth Social today.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds around 1.0300, with USD still dominating the scene
EUR/USD trades within familiar levels at around the 1.0300 mark, although the US Dollar pushes marginally higher in a quiet, holiday-inspired American session. Focus shifts to US Nonfarm Payrolls on Friday.
GBP/USD rebounds from multi-month lows, trades around 1.2300
GBP/USD trimmed part of its early losses and trades around 1.2300 after setting a 14-month-low below 1.2250. The pair recovers as the UK gilt yields correct lower after surging to multi-year highs on a two-day gilt selloff. Markets keep an eye on comments from central bank officials.
Gold hovers around $2.670, aims higher
Gold extended its weekly recovery and traded at its highest level since mid-December, above $2,670. The bright metal retreated modestly in a quiet American session, with US markets closed amid a National Day of Mourning.
Bitcoin falls below $94,000 as over $568 million outflows from ETFs
Bitcoin continues to edge down, trading below the $94,000 level on Thursday after falling more than 5% this week. Bitcoin US spot Exchange Traded Funds recorded an outflow of over $568 million on Wednesday, showing signs of decreasing demand.
How to trade NFP, one of the most volatile events Premium
NFP is the acronym for Nonfarm Payrolls, arguably the most important economic data release in the world. The indicator, which provides a comprehensive snapshot of the health of the US labor market, is typically published on the first Friday of each month.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.